Merger waves: Are buyers following the herd or responding to structural queues?
Ralph Mark Sonenshine
American University, United States
While there has been a significant amount of research covering the causes of merger waves, few papers have rank ordered merger waves based on the causes nor sought to determine which rationale leads to higher bidder payouts. This paper seeks to fill this gap by examining a cross section of large mergers across most industries occurring over a 17 year period. I find that merger waves over this period are caused foremost by changing economic and regulatory conditions. It is the behavioral rationale of mispricing, however, that more often leads to higher bidder payouts or merger premiums among acquirers in merger waves.
Keywords: Mergers and acquisitions; Merger premium; Neoclassical; Behavioral
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